Analysis of Politics, Philosophy and Economics from a Marxist Perspective

Wednesday, 23 January 2013

Cameron Craters Country's Credibility

For the last two year's I've
been pointing out the incompetence of the Liberal-Tory Government.
Its not just that they are economic illiterates, whose scaremongering
before and just after the election injected fear and loathing into
sentiment, or that this was exacerbated by the introduction of
austerity measures, which further undermined confidence, and sucked
demand out of the economy. It is the fact that they are also simply
politically inept.

For example, at a time when
they needed the support of the permanent State bureaucracy to push
through some of their policies, they attacked their very bureaucracy.
Not surprisingly, they were faced with opposition from all sorts of
quarters within it, from the police and army top brass, as well as
frustration by civil servants. Also not surprisingly, Ministers
found themselves presenting duff information to Parliament, provided
by those Civil Servants, as happened with Michael Gove's several
attempts to get the figures right over Building Schools For the
Future. All of that could have been foreseen as indeed, I pointed
out in –
A Bit Of A Pickle.

Part of the reason for that
incompetence is simply that as politicians the Liberal-Tory
Government are just not very good, partly its a reflection of the
fact of a Coalition Government, but partly it is also a reflection of
the fact that the Tories in particular are themselves a disparate
coalition, but whose determining feature is their need to accommodate
the needs and interests of their membership and electoral base, and
the extent to which that is in conflict with the interests of a
modern capitalist economy, and of the interests therefore of Big
Capital itself. They are continually left having to say one thing
for electoral and party political purposes, whilst really knowing
that they need to do something else.

That can be seen in a number
of areas, but Europe is the most obvious. To give just one other,
however, take the issue over Child Tax Credit. It is now fairly
common knowledge that when Osbourne made his announcement of
austerity measures two years ago, he anticipated that many of them
would not actually be needed. The austerity measures were back
loaded for that very reason, the heaviest immediate cuts being loaded
on to Local Government, so they could take the majority of the blame.
The part-time Chancellor hoped and believed that the economy would
continue to benefit from the growth that labour's stimulus had
created, and that similar measures taken by other Governments were
having. He hoped, therefore, to be able when the further cuts, such
as those to Child Tax Credits were due, to be able to stand up in
Parliament, and say, “We had intended to have to do this, but our
policies have been so successful, that I can now announce, that we no
longer need to make these cuts.” It was supposed to be an element
of his supposed genius for electoral strategy.

But, of course, when the
Liberal-Tories scared the shit out of consumers and businesses at the
beginning of 2010, by claiming, ridiculously, that Britain was in as
bad a state as Greece, they responded accordingly. Consumers began
to retrench, and build up their savings and reduce their debts.
Businesses did the same thing. The 2.5% growth that Labour left the
Liberal-Tories came almost instantly to a halt, even before they had
started to implement the austerity measures, as a consequence. That
meant, when those austerity measures were introduced, the economy was
already weakened, and was simply given another kick in the groin,
sending it into recession. The money printing by the Bank of
England, and the unsustainably low interest rates introduced in 2009,
could not provide any support for the economy.

It was like pushing on a
string as Keynes had described such a situation. Low interest rates,
and money printing can only stimulate the economy if consumers and
businesses want to borrow money, and are encouraged to do so by the
easier lending conditions. But, the consequence of the Liberal-Tory
policy was that the only people who wanted to borrow, were those
people who needed money to stay afloat, and who were, therefore, not
likely to pay it back! Nor surprisingly, the Banks trying to rebuild
their own Balance Sheets, and increase their profits, had no interest
in lending to such people. Rather than stimulating the economy, all
the money printing and low interest rates did, was to delay the
collapse of huge house price bubble, blow up further bubbles in share
and bond prices, and devalue the pound, thereby increasing inflation,
and squeezing household incomes that were already under pressure from
loss of jobs, and falling or frozen wages. It created the inevitable
conditions for a prolonged period of stagflation, and also for rising
welfare bills, as payments of in work benefits necessarily rose.

The consequence was that
when the time to introduce the Child Tax Benefit cuts came along,
Osbourne was left with no alternative but to introduce them, though
under pressure from Tory backbenchers, fearful of losing votes, he
did raise the level at which they were to be cut off.

The Tory Party, going back
to the end of the 19th Century has been riven with
divisions over Protectionism, and that at heart is what drives the
division over Europe. It was, after all the Tory Party that had
introduced, and defended the Corn Laws to protect the interests of
the Landlords who made up the backbone of the Part, and its electoral
support. When the industrial capitalists became dominant in the
second half of the 19th Century, they pushed through Free
Trade measures, that benefited British Capital going out into the
wider world. At the end of the century the Tories polices were
based, as some of them would have it today, on the idea of Empire,
and Protectionism for the home industries.

When the Liberals were
supplanted as the major force of Social Democracy (representing the
compromise of interests between Big Industrial Capital and the
working-class) by Labour, the Capitalists became absorbed in the Tory
Party. The Big Capitalists could hardly be seen to be members and
supporters of a Party largely dominated by workers, and nominally
committed to replacing Capital. That, however, is what happened in
the US, with the Democrats. But, that meant that the Tories were now
necessarily conflicted between one Protectionist Wing, reflecting the
interests of the small, usually inefficient, nationally based
capitalists, along with sections of Money Capital, the Landlords, and
the other social layers attached to them, and a
Liberal-Social-Democratic Wing, reflecting the interests of Big
Capital, largely efficient, able to cope with higher wages, better
working conditions, a reasonable level of social welfare and so on,
that continued to support Free Trade.

That is essentially the
division that exists within the Tory Party today over Europe. It can
be seen in the statements of various sections of Capital. The
British Chambers of Trade, which represents the interests of small,
nationally based capital, has a far larger proportion of its members
– around 45% - supporting the idea of some kind of renegotiation
than there is amongst the ranks of the big multinationals. In fact,
it is the representatives of the latter, that have eventually begun
to recognise the threat to their interests, and started to organise
to oppose the eurosceptics. It is to represent the interests of
those sections of Capital that we have had representatives of the US
State – which far more openly represents the interests of Big
Capital – come out and warn against Britain raising the prospect of
leaving the EU. There have even been some of these large companies
talking openly about leaving the UK, were it to exit the EU.

In reality, Cameron knows
that however much he has to assuage the feelings of the core of his
party membership and voter base, it is the interests of Big Capital,
that ultimately he will have to meet. That is just like, however,
much Labour Governments have had to assuage the feelings of the
workers that make up its membership and voter base, it has to meet
the needs of that same Big Capital. In fact, Labour is usually
better placed to do that than the Tories, precisely because Social
Democracy is based on a very real compromise, and commonality of
interests between workers and Big Capital, that lies at the heart of
reformism. The real sharp separation of interest lies between
workers and the small capitalists who cannot survive without the low
wages, the terrible working conditions and so on.

In reality, of course,
workers interests are also closer to those of the Big Capitalists
when it comes to issues such as Europe too. A single European State
would facilitate workers unity on a wider basis. A true single
market would mean that national competition would be reduced. It
would mean having a level playing field across the whole market,
providing common levels of Pensions, Benefits and so on, as well as
common laws on working hours, holidays, health and safety etc. It
fundamentally undermines the basis of competition as a race to the
bottom.

But, the real divisions
within the Tory Party are made manifest on precisely these kinds of
issues. It is precisely to defend the interests of the small
capitalists who cannot survive without paying poverty wages, without
providing terrible conditions, undermining health and safety and so
on, that the Tory Party seeks to obtain some protection against the
single market. It wants to protect those bad employers by opting out
of civilised regulation, just as 19th Century Tory
Protectionism sought to protect British Capital against increasingly
competitive European Capital.

If you look at the
pronouncements of UKIP and of the Tory Right, it is precisely in
order to be able to introduce further attacks on British workers
rights, and living standards that they want these renegotiations and
opt outs, and ultimately withdrawal from the EU. They do not say so
openly, at the moment, but the logic of their position is still that
of the old style Tory Protectionism, which would see them seeking to
defend the interests of the small scale, inefficient sections of
Capital they are based upon, by more overt forms of Protection were
that needed.

Of course, as the old style
Tory Protectionists did, they will cover that in phrases about
protecting the rights of British workers against foreign competition,
but that will be as hollow today, as it was when Marx and Engels
derided it more than 100 years ago. Its only necessary to see how
much these people are friends of the workers today, to see how much
such policies would be motivated for that reason. They argue these
nationalistic solutions for precisely the same reasons that the BNP
do. To meet the interests of the backward looking, reactionary
sections of British Capital.

But, for these very reasons
we can now see just how incompetent Cameron and his Government are
once again. On the one hand, the Liberals have been led, as always
happens in such coalitions, to concede ground to their Right. In
turn, Cameron has been led to concede ground to his Right, in the
hope of assuaging the Right Wing of his Party, and to undermine the
increasing support for UKIP. But, as again as always happens in such
circumstances, all that weakness does is to strengthen those to whom
you have conceded ground, and to make them bay for even more blood.
The more Cameron has wavered over Europe in the last year, the more
UKIP has gained in strength!

I pointed out the historical
analogy here with what happened in France in the events leading up to
the Coup of Louis Bonaparte –
History Repeating As Farce.
I don't expect that Britain is going to experience a coup – unless
things deteriorate considerably – but, it is quite easy to see how
the Tory Part could experience a coup, how the continuing weakness of
Cameron's leadership strengthens his Right-wing, and leaves open the
door to an even more populist leader like Crapulinsky/Johnson to take
over.

In that series, I also
pointed out the way that Cameron has effectively mimicked, but under
wholly different conditions, Thatcher. It once again reflects their
incompetence, and laziness, that thy think they can simply take off
the peg solutions – previously Cameron quite clearly modelled
himself on Blair – rather than thinking out and developing their
own solutions. The issue over the EU is again another example of
that. As well as assuaging his Right-wing, and trying to undermine
UKIP, Cameron has quite clearly another motivation for offering an
IN/OUT referendum.

Two years into her
Government in 1982, Thatcher was deeply unpopular under similar
conditions to those existing today. She was saved by the Falklands
War. The EU is Cameron's Falklands. He hopes to latch on to the
same kind of nationalist/populist sentiments that rescued Thatcher in
1982. He knows that, fed by the gutter press, who know their market,
and by the failure of Big Capital to argue the case for Europe over
the years, and indeed their undermining of that case by relying
instead on bureaucratic methods to bring about more Europe, there is
a considerable amount of opposition towards the EU. One Tory MP, in
PM's Questions today, made it obvious, she said openly “Isn't the
difference between us and the Opposition that if the voters want a
referndum they have to elect us at the next election.”

That is the real populist
motivation in Cameron's gambit. It is, in other words, an attempt at
a bribe. It is an attempt to say, no matter how much we have
cratered the economy with our economic incompetence, no matter how
much we have undermined basic elements of a civilised society with
our austerity measures, no matter how many of you we have thrown on
to the scrap heap, no matter how much your living standards have
fallen, vote for us, and we will give you a chance to leave the EU.
Its inept again, because although there is opposition to the EU –
and some of it, aimed at the bureaucratism of the EU is justified –
it is not such a vital element of ordinary people's concern that they
will ignore all those other things that the Tories have done. The
only ones who will vote for the Tories on that basis are people who
are already Tory voters anyway. At best it will stop a few voting
for UKIP.

Of course, as with Gideon's
brilliant strategy over Child Tax Credits, what Cameron hopes is
that, when it comes to it, he will stand up and argue for Britain to
stay in Europe, having been given some sops from European leaders, as
happened with Harold Wilson's “renegotiation” in 1975. That is
why he has put off any referendum until 2017, and why he will not
commit himself to saying what items of this renegotiation constitute
red lines, which would force him to argue for a NO vote. Indeed,
pressed by Miliband in Parliament today, he refused time and again to
even say whether he would call for a YES vote. Faced with the
question, if you get nothing from the renegotiation what will you
advocate, Cameron has no answer.

But, if Cameron says, I will
recommend a Yes vote, even if I get nothing, that undermines his
negotiating position. Other EU leaders would simply tell him, if you
are going to stay in whether you get anything or not, why would e
give you anything? Similarly, if he says he would recommend a NO
vote unless he gets this or that concession, he has also tied his
hands, because if he doesn't get it, then he is committed to arguing
for a British withdrawal. Its reported that the Tory Right are
already pushing further Right demanding that these red lines be
spelled out, and included in the next Tory Manifesto, so that Cameron
can't back out of any such commitment. Both UKIP and Labour are
likely to keep pressing Cameron on this for the next 2 years up to
the election, and he knows he can never answer that question. By
contrast, Miliband has come out openly and said Labour will not offer
an IN/OUT referendum, though they will offer a referendum over any
new major changes, which seems a reasonable position.

The consequence is that just
as Liberal-Tory incompetence over the economy led to it cratering, so
Liberal-Tory incompetence over Europe is cratering confidence in
Britain. How on Earth can foreign states, or large companies have
faith in such an incompetent government, how can they make any kind
of long term plans that are needed for large scale investments, if
they do not know for the next 5 years whether Britain will be in or
out of the EU, and so on. Already, over the last 6 months as this
issue has developed, the Yields on UK Gilts have risen by around 30%.
Its likely that the UK will lose its Triple A Credit Rating, and the
consequence will be that interest rates, including mortgage rates
will rise, further undermining the economy.

2 comments:

Though Cameron is reluctant to be pinned down, I think we can safely assume that the red lines will include a defence of the City's interests. Cameron, like Johnson, is ultimately the City's man.

Effectively deferring negotiation to 2016/7 is not just a tactical ploy to maximise Tory votes in the 2015 election, by attracting the UKIP-inclined, it also provides further time for the City to strengthen its position vis-a-vis the mooted banking union and the European Banking Authority.

So long as it can secure its own interests (in effect the ability to extract rents from the Eurozone), money capital will ally with big capital. Cameron's calculation appears to be that he can additionally secure enough face-saving gestures, in terms of repatriating powers over employment legislation and immigration, to then buy off enough of the out vote.

I think that's about right, but I don't think he will define any red lines, because to do so means making himself hostage to UKIP, and the Tory Right, if he doesn't secure them. In the end, Money Capital is transnational, so where its based doesn't matter. Its only the City itself that has an interest in defending itself against alternative Financial Centres.

Moreover, a Banking Union is vital to creating properly integrated European Money Capital, which London based Capital will still seek to dominate - which is why even the City opposed last year's walkout by Cameron.

The tactic seems to be, Cameron gives a nod and a wink to European leaders that he's committed to a vote to stay in, whatever happens in negotiations. Merkel et al then give him some meaningless concessions. He then says, we've renegotiated and got this, so Vote Yes. But, its events dear by, events.

The Tory Right and UKIP will know that, and keep pressing ever rightwards. UKIP is already doing that. In the meantime, the uncertainty will further cripple the UK economy.

About Me

Left school at 16. Became an ASTMS shop steward at 19, and a lifelong trade union activist. Delegate to North Staffs Trades Council 1974-87. Secretary North Staffs Miners Support Committee 1984-5. President North Staffs Trades Council 1985-6 and 1986-7. Delegate to Staffordshire Association of Trades Councils 1985-7. Delegate West Midlands Regional Council of the TUC 1985-7. Secretary Newcastle UNISON 2000-2.
Member of the International Communist League/Workers Socialist League 1974-87.
Went to University as mature student at age of 24. Obtained Joint Honours Degree in Economics and Politics with Philosophy and Statistics, followed by a Post Graduate Certificate in Education.
Labour Party member since 1974. Stoke City Councillor 1983-4, expelled from Labour group 1983, and resigned from Council in 1984 because of refusing to vote for rent and rate rises, and budget cuts. Staffordshire County Councillor 1997-2005.
Assistant Secretary Stoke District Labour Party 1981, and held pretty much every position from Executive member, to Branch Secretary, and Branch Chair.